On January 14, 2013, EPA signed final revisions to the RICE NESHAP (and related NSPS for consistency) allowing for expanded use of emergency engines in non-emergency situations. The action bans peak shaving by emergency engines after May 3, 2014, but does allow limited participation in demand response programs. If you operate a stationary emergency engine in order to be able to respond to emergency power needs ("emergency stationary engine") and are, or are considering, participating in emergency demand response or peak shaving programs, you will need to understand and comply with these new revisions to the federal regulations.

The action applies to all stationary spark ignition and compression ignition engines. Emergency stationary engines at area sources of hazardous air pollutants ("HAP") that are residential, commercial, institutional, or industrial facilities are covered by the rule if the engines operate or are contractually obligated to be available to operate for more than 15 hours per year for emergency demand response, or if they operate to mitigate local transmission and/or distribution limitations. The rule becomes effective for existing compression ignition stationary engines at area sources of HAPs on May 3, 2013 and for existing spark ignition stationary engines at area sources of HAPs on October 19, 2013.

Portable or transportable engines are not subject to the rule. EPA considers an engine to be portable or transportable if it has “indicia of transportability” which “include, but are not limited to, wheels, skids, carrying handles, dolly, trailer, or platform”. However, it is important to remember that if an otherwise portable engine remains in one location for more than twelve months, EPA considers it to be forever after a stationary engine. Additionally, one cannot simply relocate an engine solely to avoid it becoming a stationary engine; there must be some business purpose for the move.

When EPA published the existing RICE rule under a court deadline in 2010 (the "2010 Rule"), it immediately agreed to reconsider certain provisions including the ability of emergency stationary engines to participate in demand response programs. The 2010 Rule restricted the hours available to participate in demand response to 15 hours and banned peak shaving. For the rule reconsideration, EPA proposed better defining demand response conditions and expanding the number of available hours for non-emergency use, including testing, to 100 hours, 50 of which could be for peak shaving until April 2017 at area sources of HAPs.

The revised rule, applicable to all emergency engines:

Allows unlimited emergency use.

Allows up to 100 hours per year combined of non-emergency use, including –

maintenance and readiness checks (as recommended or required, or otherwise specifically approved by EPA), and

Demand response allows up to 50 hours per year counting toward the 100 hour per year limit, for:

Energy Emergency Alert Level 2 conditions

Frequency or voltage deviations of 5% or greater.

At major sources of HAPs, the 50 hours per year for non-emergency situations cannot be used for peak shaving or non-emergency demand response, or to generate income for a facility to supply power to an electric grid or otherwise supply power as part of a financial arrangement with another entity.

For area sources only, up to 50 hours of the 100-hour maximum may be used to supply power to another entity under a financial arrangement, when,

the engine is dispatched by the ISO,

the dispatch is for system reliability,

the dispatch follows reliability protocols,

power is provided only for the facility itself or for the local transmission and distribution system, and

the dispatch information is recorded by the owner (or local authority/system operator).

Also, until March 3, 2014, for existing stationary emergency engines at area sources, up to 50 hours is allowed (counting toward the 100 hour per year total):

if the engines are operated as part of a peak shaving (load management) program with the local distribution system operator and the power is provided only to the facility itself or to support the local distribution system, of

peak shaving,

non-emergency demand response to generate income for a facility, or

to otherwise supply power as part of a financial arrangement with another entity.

If an emergency engine exceeds any of these limits, it is forever excluded from qualification as an emergency engine and will need to meet the applicable non-emergency RICE NESHAP or be replaced with a new, low-emissions engine. Older engines losing their emergency status would require major controls to meet the emission limits of a non-emergency engine.

Additional technical requirements of the rule for emergency engines include:

Operate and maintain the stationary RICE according to the manufacturer’s emission-related operation and maintenance instructions, and

Beginning in 2015, emergency CI RICE engines over 100 horsepower ("HP") operated or committed for more than 15 hours under these programs will be required to:

inspect spark plugs every 1,000 hours of operation or annually, whichever comes first, and replace as necessary, and

inspect all hoses and belts every 500 hours of operation or annually, whichever comes first, and replace as necessary.

For all emergency engines over 100 HP operating or contractually obligated to be available for more than 15 hours per year, file electronic annual reports, starting in 2016 for calendar year 2015, documenting all non-emergency operation. EPA anticipates that the dispatching entity will file these reports on behalf of the facility that owns the engines.

If you have questions regarding your operations coverage by this rule revision, or if you would like assistance in negotiating participation in you ISO's demand response program, please contact: Rick Friedman at 717.237.5469 (rfriedman@mwn.com), Scott Gould at 717.237.5304 (sgould@mwn.com), or Bob Weishaar at 202.898.5700 ( bweishaar@mwn.com).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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